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Sunday, October 28, 2007


A city in turmoil

A recent article in the Wall Street Journal talked about Houston and the affects of not having zoning laws. Houston, is the fourth largest city, and happens to be the only U.S. city that does not have zoning. Because it does not have these regulations you get a lot of strange combinations in the city. Condo towers are next to schools and there is even a pay-by-the hour motel near a Baptist church. The residents of a well to do neighborhood are angry because there is a development group that wants to build a 23-story condominium tower among the million dollar homes. The residents have hired a lawyer to help them fight their cause. The issue now is because there are no zoning regulations they cannot stop this project. The developers have done everything the city has required of them from sewer upgrades to impact fees, and do not plan on scaling down the project. Since there are no zoning laws in the city you can bet the price they paid for that land was quite high considering were the land is located. From an efficiency standpoint, the land went to the most valued user since the neighbors did not see it in their best interest to buy the land before the developers. Is it a negative externality? To answer this question I would have to ask my self if who would we tax? I do not think there is any party to tax; therefore, it is not a negative externality. The residents who oppose this transaction can sell their property. The developers obviously see an opportunity in building these condos or they would not be willing to pay such a high price for the land and the development.

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